Greece's 'deal or no deal' moment is finally here

German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras at the Chancellery on March 23 in Berlin.
Sean Gallup/Getty Images
The current chapter of Greece's European bailout drama seems to be reaching a climax.

The leaders of all the major creditors met Monday night: Mario Draghi of the European Central Bank (ECB), Christine Lagarde of the International Monetary Fund (IMF), Jean-Claude Juncker of the European Commission, and Angela Merkel and Francois Hollande of Germany and France, the Eurogroup's two largest economies.

They were hammering out a final unified stance to present to Greece before Athens has to make a payment to the IMF on Friday, one that by all accounts it will seriously struggle to make. This seems to be the country's "Deal or no Deal" moment — a take it or leave it offer after months of back and forth.

The anti-austerity government that took power in January has been locked in difficult talks to unlock billions of euros in bailout money so it can avoid a default — but there may just be too much of a gulf between the leftists who now run the Greek state and the international institutions that fund the country's bailout.

Greece has been told by the IMF that it can bundle the payments it has to make this month (of which there are four) into one, which could delay the payment until later — but so far the government has expressed little interest in this option.

What remains to be seen is how much the two sides have actually compromised on.

The German newspaper Die Welt reported overnight that Greek Prime Minister Alexis Tsipras was beginning to cross one of his own negotiating red lines, considering reforms to Greece's pension system that include cuts and a higher retirement age.

If true, that's a major development on one of the four important compromises the deal will need. Here they are:

Greece's fiscal position: This includes both immediate concerns, such as how much of a budget surplus Greece is expected to run, and potentially longer-term debt relief.

Privatisation: The new government was elected in part in objection to the privatisations that have been brought in under previous agreements.

Pensions. As mentioned, the institutions lending Greece money think the country's pension system is too generous and needs paring back. This could be a huge political problem for Tsipras if he concedes.

According to Manos Giakoumis of the Macropolis consultancy, Greece's deputy prime minister says Greece must not be asked to run a primary budget surplus (before interest payments) of more than 1% of gross domestic product this year and 1.5% next year. Those are big reductions from the 3% for this year and 4.5% for 2015 that the previous bailout deal projected.

Greek labour minister Panos Skourletis sounded less promising, telling Skai TV that the government was effectively done making compromises and that any compromise that moved the government further away from its election promises would be grounds for an election.

That shows some of the internal political opposition that Tsipras is up against. He'll have to pass any deal (and the reforms attached) through his own parliament, and the content will determine how many of his own leftist lawmakers rebel. Forging alliances with other parties, including potentially the centre-right New Democracy that he ejected from power, could be a painful ask.